Servias Ministries Blog

Let’s say you have access to power and authority under the current system.  You also have a considerable amount of wealth yourself or access to wealth.  This is a two phase process.

First, you initiate a fiat currency system in society and everyone is convinced that this system is workable and they accept the currency as a medium of trade.  You begin your process by implementing this system in society.  For a few years all is well and the currency is accepted in commerce.  Now you begin to print more and more currency so you can buy up hard assets.  This is debasing the currency to benefit your plan.  The sellers willingly sell to you because of their confidence in the currency.  You pay for their assets with worthless paper, only valued by perception.  Once you have bought up their assets, you now need to protect yourself from losing those assets by someone else with more of the fiat currency.  It is now time to change the rules and convert to a sound currency.

You revert back to a gold-backed system of payments and only those who have gold can buy assets back.  Since you have been acquiring gold with fiat currency, you can protect yourself from others attempting to take your assets from you with your low cost gold.  Those left holding the fiat currency end up with nothing but memories.  What a plan!

In 2012 gold only went up 7% in price.  We could only wish all investments could achieve the same return on investment (ROI).  Gold is honest money held in order to protect investors from the destruction of paper money.  Central Banks continue to destroy value of paper money and now hold $15 Trillion in paper money on the balance sheets.  Most of the growth of their balance sheets has occurred since 2007.  On the other hand, China continues its plan to acquire gold so that it can create its own reserve currency.  This multiyear plan has been consistently importing large quantities of gold.  The Western governments have obliged by suppressing the price of gold thus creating a large transfer of wealth to the Eastern Kings.

The U.S. debt now reported to be about $70 Trillion (including unfunded liabilities) has interest payments of approximately $1 Billion per day.  If interest rates went up from the current 2% to 5%, a normal rate, in ten years the U.S. Debt would grow from $16 Trillion to $40 Trillion (excluding unfunded liabilities).  Interest alone would be over $1 Trillion per year.  You can see why compounded interest is the “8th wonder of the world”.  This scenario assumes that the U.S. will not add other debt.  What are the chances?

The U.S. Government accounts for 40% of the economy and growing.  In Europe, the number is 60%.  The implementation of the Basel III accord (Banking guidelines) has been postponed until 2019.  This means that the banks cannot survive compliance of prudent reserve requirements.  Their toxic investments still reside on their balance sheets.  Central Banks continue to suppress interest rates so that commercial banks can attempt to generate enough profits to offset the worthless assets being used to prop up their reserve requirements.  This transfers wealth from the average person to the banks by way of cheap rates for their money.  Massive amounts of wealth are being transferred everywhere!

Which would you rather accumulate: honest money or dishonest money?  The Law of equal weights and measures demands honest money.  The current system has endorsed dishonest money.  Which will Our Heavenly Father back?

The release of economic data tends to favor the sitting president.  Government statistics are released and are usually overstated to the positive and then later revised downward to the real numbers.  The revised numbers are normally on “page 5” and not the headline of the news.  Had the real numbers been released, President Obama might not have been reelected.  However, unemployment ticked downward and reports of recovery were sprinkled over the airways.  Now we are once again dealing with the realities as reported by John Williams at www.ShadowStats.com:

December Unemployment: 7.8% (U.3), 14.4% (U.6), 23.0% (ShadowStats.com)

“The economic releases of this past holiday-shortened week showed real median household income in November to be in continuing severe downturn…”

“On the unemployment front, the December U.3 unemployment rate actually increased by 0.1%, although it was reported as “unchanged” at the headline level.”

“The White House and the Congress have pushed the planned second day-of-reckoning further into the future by another two months.”

The American people need the truth and facts on a timely basis.  They are ultimately called on to pay for the reality of the economic chaos ahead.  Politicians are gambling with the future generations’ opportunities and well being.  Our Heavenly Father is the only One with a solution to the deepening economic chaos ahead.  The complexities that surround the economic picture are beyond the comprehension of the average voter and taxpayer.  Self interest defines the current path to destruction.  How can businessmen truly plan their future with all of the economic uncertainty out there?  There is only one way.  Be still, do only what Our Heavenly Father tells you to do.  Resist the temptation to do projects for the sake of staying busy.  We MUST hear Our Heavenly Father’s voice!

Right on the heels of my blog is the expected all out assault on the precious metals.  Each and every time that there is a major economic event that should put gold & silver in a positive light, the opposite happens.  It is my belief that this is a managed attempt to dissuade the market from look at the true state of the economy.  Unfortunately the markets are not free and independent but subject to manipulation by the large investment banks who get their instructions from those who believe they are in ultimate control.

The net result of manipulating gold, silver, and related stocks downward is to provide China and India with buying opportunities at lower prices.  It works well for those of us who believe that the upward trend in prices is still in place.  The U.S. economy is not getting stronger, the U.S. debt crisis has not been solved nor will be under the current system.  The toxic debt and derivative weapons of mass destruction are still looming.  The currency war has not ended but is getting into full swing.

If you do not leverage your investments you will sleep better and look at this current environment as a buying opportunity.  If you believe that the current system has been fixed, you should sell your hard assets and convert to U.S. Dollars and disregard the raw U.S. Government statistics that John Williams at shadowstats.com has faithfully reported and summarized in my previous blogs.  Only Our Heavenly Father knows what is coming down the pike.

I have spent the last two years slowly accumulating gold & silver shares as funds have allowed.  I don’t give financial advise but I do share with others what I am doing myself.  Based on my personal observations and navigating through all the macroeconomic numbers, there is a true lack of ethics and integrity at the highest levels of governments around the world.  With few exceptions, the elite think they have all the answers yet they continue to take actions that would indicate the opposite.  If we were truly in a recovery, the Fed would not continue its Quantitative Easing campaigns.  We would not be constantly dealing with another fiscal cliff.  Government debt continues to grow.  In the midst of all of this economic ugliness the average person is simply trying to retain value and acquire some form of insurance against economic calamity.  In my view, hard assets have the best chance of retaining value.

The following chart provides us with a clue to the opportunity this year:

If a person can acquire a portfolio of solid gold & silver mining, and energy stocks, the portfolio appears to be set for a substantial return on investment this year.  My family owns shares in Silvercorp (SVM), Goldcorp (GG), McEwen Mining (MUX), Penn West Energy (PWE), Lexam VG Gold (LEX.TO), Chevron (CVX), and others.  With the Federal Reserve creating new money at a record pace, the hard assets should increase in value.  Well managed companies should see their share values increase.  A global severe recession could change all of these assumptions and crush stock values.  However, the underlying hard assets will still have value in a recovery.  Dividends from senior producers are a plus.

Disclosure and Disclaimer Statement: The author has personal investments in gold and silver bullion, as well as in gold, silver, uranium and base metal mining shares. The author’s objective in writing this article is to interest potential investors in this subject to the point where they are encouraged to conduct their own further diligent research. Neither the information nor the opinions expressed should be construed as a solicitation to buy or sell any stock, currency or commodity. Investors are recommended to obtain the advice of a qualified investment advisor before entering into any transactions. The author has neither been paid nor received any other inducement to write this article.

Let’s first review my view from last year-

Silver:  “It is clear the silver has greater volatility attached to it, especially with an 81.9% move in 2010.  At this writing, I expect to see a drop similar to 2008.  Those that have the ability to manipulate the price will attempt to remove anyone who is “long” silver in a leveraged position.”

The price began the year at $28.78 and is ending the year around $30.00, a 4.2% increase.  It had a $10 swing during the year.  That is volatility.

Gold:  “I expect gold to move between 1,500 and 2,100 for 2012 unless the Iran conflict heats up or the European crisis reveals worse financial losses than previously reported. “

We began the year at $1,598 and gold closed at $1,657, a 3.7% increase.  The low was $1,540 and the high was $1,791, a $251 swing.

Both metals performed about how I expected.  Summertime is typically down for metals as it was this year.  Documented manipulation kept both metals at the lower end of my expectation, especially gold.

In 2013, I expect gold to break the $2,000 price level and silver should break $40.  Right now my focus is on the gold and silver mining shares.  I believe they are 20% underpriced versus the metal.  I believe that accumulation of the physical metal is insurance.  Your safe deposit box may be heavy but it did better than bank Certificates of Deposit this year.  I don’t provide recommendations for other people’s investments, I simply share what I am doing for my family.  I bought silver in the $28 range this year as well as the $32 range.  It matters not to me about the volatility since I believe the price is in an upward trend.  Obviously I would love to buy at the low.  I simply buy a little as I get some extra cash.  If the price seems a little high, I wait until it moves back down.

If the currency wars really heat up, the sky is the limit on precious metal prices.  It we have another financial system meltdown, people will flee to the safety of gold & silver.  If the various governments around the globe curb spending, become fiscally responsible and begin in earnest to pay off fiscal debt, the metals could suffer.  I don’t think that will happen.  My conclusion is that gold and silver will continue their upward trek.  Gold’s channel will move between $1,600 and $2,200.  Silver appears to have built a $28 base and could see $45-50 this coming year.  A black swan event could bust the highs overnight.

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Why don’t we?

I don’t think so.

“Courtesy of ShadowStats.com”

Many Americans have never traveled overseas thus they are unaware that other countries pay close attention to the news coming out of the U.S.  Since we are the largest economy in the world, our actions or inaction causes ripples in other countries.  The current fiscal cliff impasse is pathetic.  Politicians have known for years that this day would come.  Addiction to power has caused them to become blind to the real reason they are there- to serve the people.  Instead they walk the halls as though they have been “anointed” kings.  Our Heavenly Father DOES select men and women to carry out judgment on the land.  HE does use vessels of dishonor to carry out HIS plan when lawlessness prevails in the hearts of men.  This is not a time of blessing.

The U.S. Treasury Secretary came out on 12/26 saying that he could do some maneuvering to postpone the shutdown for up to a couple of months.  Why is this just now being divulged?  The politicians do not really care if the average worker lives in fear and uncertainty about their upcoming budget crunch.  Congressman have a sweet retirement and healthcare plan that is much better than all but a few of their constituents.

The damage done to global confidence in the U.S. dollar from collapsed negotiations may be severe and largely irreversible.  Normally gold is a good barometer but it has been heavily manipulated recently, more so than usual.  As an alternative, the price of oil appears to be a good short-term barometer.

Federal Reserve actions to avoid systemic collapse in 2008 and to boost economic growth merely did nothing more than assist politicians in kicking the proverbial can a bit further down the road.  Expanded quantitative easing by the Fed  in an effort to keep the system liquid has failed to produce a sustainable outcome.  The systemic-liquidity crisis continues and appears to be intensifying anew, and it is likely to come to a head in 2013.  The day that the bond market has an epiphany about the sad state of the U.S. fiscal balance sheet, the dung will hit the fan.  Interest rates will ratchet up and the dollar will slide.  The price of gold and silver will open up with extreme gains and oil will look at new highs in terms of the U.S. Dollar.  To make things worse, Japan (3rd largest economy) will be inflating its currency.  All this is destined to occur unless Our Heavenly Father intervenes and changes the course of the path we are all on.

If this is the transition to Kingdom economics, bring it on.  Throughout Scripture, transitions never occur without pain.  There are 13 global famines mentioned in Scripture.  Times were tough.  Noah understood the term “transition”.  However, Our Heavenly Father is in control and those of us who believe that HE will ultimately fulfill HIS plan will continue to seek HIS Face and be a part of the solution to the huge mess mankind has once again created.  Prepare yourself.

Incompetence is the lack of physical or intellectual ability or qualifications.  The U.S. continues to pursue increased complexity in all aspects of its various systems.  Banks are thought to be too big to fail, Government follows a path of unlimited borrowing and unsupportable financial commitments, and students borrow money for fields of study that are in no way economically justified.  The ego’s standard modus operandi is to create a problem to be fixed.

How many of us use more than 20% or our smart phone’s capability?  How many electronic gadgets are now collecting dust on our shelves?  We marvel at our children’s toy boxes full of under-utilized toys yet we continue to create complex solutions that are suppose to make our lives better.

What new feature do we need in our automobiles?  It is increasingly difficult for auto makers to find the next big thing.  Hey, stick  your foot under the tailgate to open it!  I wonder how much that will cost to fix when it breaks?

In growing up, many teenage boys learned to work on their car, by necessity.  I could replace a starter in twenty minutes.  Now, there is no way I would tackle the job.  Fuel pumps now located in the tank???  Engineering is now been compromised by the financial manipulators.  The goal is to extract wealth from the unsuspecting public.  The cost to replace a Lexus starter is much more than a Toyota starter even though they are probably the exact same part.  It is all about perception.

Financial engineering has now become an art form, anything goes.  Regulation occurs with a “wink” at the highest levels for the so-called greater good.  How much longer will this path to collapse be sustained?  Only Our Heavenly Father knows for sure.  Until then we must step back and assess our personal path.  We can be assured that another bubble will burst.  What day will that happen?  Probably on a day least expected by most people.  After the fact there will be many to claim that they predicted the collapse.  If you throw out enough predictions, you are bound to get one right.

Specific prophecies and predictions require specific performance.  Until Our Heavenly Father gives you a specific word about the future, you should live your life based on HIS written Word and your specific calling.  How many contemporary prophets have prophesied specific words that have not come to pass?  Often these words will cause many people to place such weight on the prophecies they will cease any fruitful works.  The Mayan Calendar end date was one such prophecy.  The prophetic landscape has become so complex that on any given day, prophetic events could be deemed to occur.  The predictions I write about are based on what I see going forward based on my calling.  Unless Our Heavenly Father gives me a specific, unsolicited Word, I prefer to keep my comments generalized.  In the meantime our guide should be confirmed by HIS Word in Scripture.  We are all to be fruit inspectors.  “End time” prophecy teachers on TV have been issuing the same predictions over and over.  If their word does not come to pass, shouldn’t we focus on what we are called to do rather than the distractions all around us?

In my forty plus years of exposure and experience in the Information Technology arena, I can attest that higher complexity produces ultimate collapse.  Modular programming is simpler and maintainable.  One huge program with many functions may work but will not stand the test of time.  The same is true for other systems around us.  My recommendation is to continue to simplify your life in this world of ever increasing complexity.  In the end, the complexity will make us all incompetent.